Altifi Online Bond Platform – Good or Bad? An Insightful Review

Many investors crave stability and predictable returns when building their portfolios. Fixed Deposits (FDs) promise guaranteed returns through fixed interest rates—but the trade-off is limited liquidity. Bonds, too, can offer steady and predictable returns, though the level of risk and liquidity can vary.

So, if you’re aiming for diversification, the real question is—do bonds truly fit your risk appetite and financial goals?

In this article, we take a closer look at one such online bond platform provider—Altifi.

Table of Contents:

1. Understanding the Bond Market
2. What Is a Bond?
3. Government Bonds
4. Private/Corporate Bonds
5. Importance of Credit Ratings
6. Top Credit Rating Agencies in India
7. Types of Bonds Based on Collateral
8. Altifi Platform Overview
9. Product Offerings of Altifi Bond Platform
10. Interest Pay-outs – Steady Income, But at What Cost?
11. Minimum Investment – Low Barrier, Smart Choices Needed
12. Platform Features – Convenience Meets Caution
13. Suitability
14. Altifi Taxation: How Your Investments Are Taxed
15. Comparisons with Equity: A Deeper Look at Risk
16. The Franklin Templeton Shock: When “Safe” Funds Went Silent
17. “History Doesn’t Repeat, But It Often Rhymes”
18. TruCap Bonds: A Cautionary Tale for Retail Investors
19. What Makes Credit Risk So Tricky?
20. Key Takeaways
21. Conclusion

Understanding the Bond Market

Have you ever lent money to a friend, expecting it back with interest? That’s essentially what a bond is—only at a formal, large-scale level.

Bonds allow governments and companies to borrow money from the public, promising to repay with interest.

But what keeps this market moving? Why is the bond market often called the backbone of the economy?

And if it’s so important, why do so few retail investors participate?

Historically, it’s been about access, awareness, and ease of investing—three areas where retail investors have been left out. But platforms like Altifi are now trying to bridge that gap.

What Is a Bond?

At its core, a bond is simply a loan from an investor to a borrower.

The borrower agrees to repay the principal along with periodic interest. Sounds simple enough, right?

But here’s where it gets interesting:

• What happens if the borrower defaults?
• How do bond prices react when interest rates change?
• Can you sell a bond before maturity, and if yes—how easy is that?

These questions show why understanding a bond’s terms, credit rating, and liquidity is crucial before investing.

Government Bonds

Government bonds are often seen as the gold standard of debt investments in India.

Issued by the Government of India, they’re considered among the safest options.

But is safety the only factor that matters?

• Can their returns actually beat inflation?
• How quickly can you liquidate them if you need funds?
• Is the investment process smooth for retail investors?
• Are there hidden costs or liquidity traps?

While G-Secs offer unmatched security, their returns and liquidity may fall short for some investors.

They’re best suited for conservative profiles.

Quick facts:

• Minimum Investment: ₹1,000 (in multiples of ₹1,000)
• How to Invest: RBI Retail Direct portal

Private/Corporate Bonds

Why were corporate bonds off-limits for so long? One word—entry barriers.

Earlier, high ticket sizes kept them out of reach for most.

But with SEBI reducing the minimum investment to ₹10,000, retail investors now have a way in.

Still, important questions remain:

• How do you decide which corporate bond is trustworthy?
• Should you stick to AAA-rated ones only?
• Does a higher yield automatically mean higher risk?
• How do you check the company’s fundamentals or debt history?

Corporate bonds can offer attractive returns, but they demand careful selection and research.

Importance of Credit Ratings

Would you hand over your money to someone without knowing if they could repay? Probably not—and that’s why credit ratings matter.

But here’s the tricky part:

• How reliable are these ratings, really?
• Have there been defaults even among high-rated bonds?
• Should a downgrade set off alarm bells?
• Can a single rating truly reflect a company’s health?

Credit ratings are a helpful starting point, but they must be weighed alongside cash flow, business fundamentals, and market conditions.

Top Credit Rating Agencies in India

Here’s the list of key players:

• CRISIL
• CARE Ratings
• ICRA
• SMERA
• Brickwork Ratings
• India Ratings & Research

Do all of them follow the same rating approach? How often are ratings updated?

And since the issuer pays for the rating, can conflicts of interest creep in?

Tip: Check ratings from multiple agencies and keep an eye on updates—especially in volatile markets.

Simplified Rating Scale:

Safety Level	CRISIL	CARE	ICRA
Highest Safety	CRISIL AAA	CARE AAA	ICRA AAA
High Safety	CRISIL AA	CARE AA	ICRA AA
Low Risk	CRISIL A	CARE A	ICRA A
Moderate Safety	CRISIL BBB	CARE BBB	ICRA BBB
Moderate Risk	CRISIL BB	CARE BB	ICRA BB
High Risk	CRISIL B	CARE B	ICRA B
Very High Risk	CRISIL C	CARE C	ICRA C
Default	CRISIL D	CARE D	ICRA D

Types of Bonds Based on Collateral

Not all debt is created equal—so what should you, as a retail investor, look for?

• Senior Secured Bonds: Backed by collateral—your safest bet.
• Senior Unsecured Bonds: No collateral—higher risk.
• Subordinated Bonds: Paid only after senior bonds—riskier still.
• Perpetual Bonds: No maturity date—highest risk.

If the issuer goes bankrupt:

• Who gets paid first?
• Will you get anything back from a defaulted bond?
• Does collateral actually protect you in real-world scenarios?

In general, prioritising secured over unsecured debt can be a smarter move for conservative investors.

Altifi Online Bond Platform Overview

Altifi, a wholly-owned subsidiary of Northern Arc Capital, positions itself as a retail debt platform that makes bond investing fully digital.

With a clean, user-friendly interface, it offers access to a range of fixed-income products—corporate bonds, government securities, commercial papers, and more.

Sounds convenient, right? But as an investor, the real questions are:

• Does the platform guarantee complete safety, or does it simply comply with basic regulations?
• How transparent is it about the risks?
• Can you really rely on its built-in filters to make the right investment choices?

SEBI’s regulatory framework certainly provides safeguards against fraud and enforces operational discipline—but it can’t remove the possibility of bond defaults.

That’s why, despite the platform’s simplicity, investors still need to dig deeper: analyse issuers, understand credit ratings, and assess risks before parting with their money.

Product Offerings of Altifi Online Bond Platform

Altifi showcases a broad range of corporate and government fixed-income instruments, including:

• Bonds
• Listed corporate bonds
• Mutual funds
• Commercial papers
• NCD IPOs
• Treasury bills
• Fixed deposits
• Sovereign Gold Bonds (SGBs)
• Government securities
• Securitised debt instruments

Sounds like a lot of choice—but here’s the catch: many of these are not actively available.

Right now, the only active investment options are in the Listed Bonds category.

Interest Pay-outs – Steady Income, But at What Cost?

Bonds and fixed-income products generally pay interest monthly, quarterly, or semi-annually, depending on the product.

Regular pay-outs can feel reassuring—especially for retirees—but they come with trade-offs.

Before choosing this route, consider:

• Loss of Compounding: Are you giving up long-term growth because your interest isn’t reinvested?
• Manual Reinvestment: Will you actually take the effort to reinvest each pay out?
• Post-Tax Returns: Could growth-oriented options like equity mutual funds give you better after-tax results?
• Default Risk: What happens if the issuer runs into financial trouble?

Regular income is great if you need it. But if your goal is wealth creation, reinvestment becomes critical.

A disciplined reinvestment strategy can help you enjoy the best of both worlds—steady income now and growth later.

Minimum Investment – Low Barrier, Smart Choices Needed

With Altifi, you can start investing with as little as ₹10,000—making fixed-income options accessible to most investors.

But accessibility doesn’t automatically make it right for you. Ask yourself:

• Portfolio Fit: How much of your overall portfolio should really be in bonds?
• Emergency Fund Safety: Is this the safest place for your emergency fund? (Hint: No—because of liquidity constraints.)
• Strategic Role: Does this fit into your asset allocation and long-term plan?

A low entry point can be tempting. But remember—purpose comes before purchase.

Platform Features – Convenience Meets Caution

Altifi’s mobile-friendly platform lets you sign up, complete KYC, browse products, invest, and track your portfolio—all from your phone or laptop.

You’ll find essential details like interest rates, maturity dates, and credit ratings for each listing.

Sounds seamless—but don’t let convenience cloud caution. Before clicking ‘Invest’, ask yourself:

• Risk Awareness: Are all risks clearly outlined?
• Over-Reliance on Filters: Are you going beyond the platform’s filters and doing your own research?
• Oversimplification: Could the sleek design be hiding the complexity of certain products?

The platform is a tool—not a guarantee. Your due diligence remains non-negotiable.

Suitability

Altifi targets investors who are open to non-traditional debt products, often in pursuit of higher returns than traditional fixed deposits or savings schemes can offer. But higher returns usually mean higher risk.

It may suit:

• Investors comfortable with higher-risk debt options
• Aggressive savers aiming to beat traditional FD rates
• Individuals with surplus capital who’ve already built a strong core debt portfolio

Before investing, pause and ask:

• Am I ready to face the possibility of issuer default?
• Can I stay invested until maturity—or live with illiquidity if I need to exit early?
• What if the platform itself shuts down or changes its model?
• Does this fit into my broader financial strategy and risk appetite?

Altifi can work as a return-boosting layer in your debt portfolio—not as its foundation. Use it only once your core needs and emergency reserves are secured.

Altifi Taxation: How Your Investments Are Taxed

Investors earn in two ways—interest income and capital gains—both of which are taxable.

Interest Income

The interest earned from bonds is added to your Gross Total Income (GTI) and taxed as per your individual income tax slab rate.

Capital Gains

Capital gains arise when you sell the bond for more than its purchase price. These gains are classified based on the type of bond and holding period:

For Listed Bonds:

• Held for more than 12 months:
  Taxed as Long-Term Capital Gains (LTCG) at 10% (without indexation).
• Held for 12 months or less:
  Treated as Short-Term Capital Gains (STCG) and taxed at your slab rate.

For Unlisted Bonds:

• Held for more than 36 months:
  Taxed as LTCG at 20% (without indexation).
• Held for 36 months or less:
  Treated as STCG and taxed according to your income tax slab.

Comparisons with Equity: A Deeper Look at Risk

The online bond platforms say their bonds offer “higher returns than FDs and are less risky than equity.” Sounds promising, right?

But let’s pause for a moment—what does “less risky” really mean?

Yes, equities—especially mutual funds—can be volatile.

We’ve all seen markets swing wildly, sometimes falling 40–50% during a crash. But here’s the thing: equity funds don’t “default and will not become zero.”

You don’t lose your capital unless you choose to exit at the wrong time. Historically, markets have recovered.

Patient investors often come out stronger on the other side.

Now contrast that with bonds.

What happens if the bond issuer fails to pay interest or return your capital at maturity?

That’s not just volatility—that’s a default, and it can mean permanent loss. And we’ve seen this before:

• DHFL (2019): Over ₹1,500 crore defaulted—both interest and principal.
• IL&FS (2018): A massive ₹91,000 crore default that shook the financial system.
• YES Bank AT1 Bonds: Retail investors lost everything—100% write-off.

So, are bonds “less risky” just because they’re not stocks? Not quite.

Even senior secured bonds carry credit risk.

While they’re typically backed by collateral, it’s not a guarantee against loss.

What if the collateral drops in value? What if recovery takes years—or doesn’t happen at all?

Meanwhile, equity mutual funds bring other strengths to the table: diversification, liquidity, and professional management.

And when viewed over the long term, their risk-adjusted returns—especially from large-cap or hybrid funds—can be surprisingly strong.

The bottom line?

Bonds may feel “safe” because they’re stable on the surface, but they carry their own kind of risk—just in a different form.

So instead of asking, “Which one is safer?” maybe ask:

• “Can I handle the ups and downs of equity?”
• “Am I prepared for illiquidity or a default in bonds?”
• “Does my portfolio balance growth with safety?”

There’s no one-size-fits-all answer. The key is to match your investments to your temperament, time horizon, and financial goals.

Because at the end of the day, smart investing isn’t about picking sides. It’s about knowing your risk—and owning it.

The Franklin Templeton Shock: When “Safe” Funds Went Silent

Let’s rewind to April 2020.

Franklin Templeton—one of India’s most trusted fund houses—abruptly shut down six debt mutual funds. Just like that, over ₹25,000 crores of investor money were frozen.

And here’s the twist:
These weren’t underperforming funds.
They had consistently outperformed fixed deposits for years.

For many investors, they felt like the perfect balance of returns and stability.

Until they weren’t.

The pandemic triggered panic redemptions. The bond market froze.

There were no buyers for the low-rated, illiquid bonds Franklin had loaded up on.

And suddenly, investors were locked out of their own money—for months.

The funds hadn’t “failed” on paper. But the structure collapsed under stress.

Eventually, most investors got their capital back.
But the lesson was loud and clear:

“Strong past performance isn’t protection against a weak portfolio underneath.”

“History Doesn’t Repeat, But It Often Rhymes”

Now pause for a second.

If a reputed AMC like Franklin Templeton—with seasoned fund managers, SEBI oversight, and daily NAV disclosures—could end up freezing investor money…

…what about platforms offering unlisted bonds from lesser-known issuers?

• No regulatory NAV.
• No secondary market liquidity.
• No guarantee of principal.
• And no historical data that’s been tested in a true credit crisis.

We’re not saying Altifi or similar platforms are scams. Far from it.

But ask yourself—

Do you really know what’s backing that “9.5% fixed return”?

What if the underlying NBFC hits a cash crunch?

Who steps in to protect you then?

Even Franklin’s investors had to wait months.

Here, the risks are higher—and the safety net thinner.

TruCap Bonds: A Cautionary Tale for Retail Investors

TruCap Finance Ltd, a Non-Banking Financial Company (NBFC), raised funds by issuing Non-Convertible Debentures (NCDs) to the public.

These funds were used primarily for lending to small businesses and providing gold loans.

While TruCap boldly advertised attractive coupon rates (13%+), the associated risks were often buried in the fine print—a red flag for vigilant investors.

The Problem with Chasing High Returns

Many investors are drawn in by the notion that “higher interest is always better.”

However, in the world of bonds, returns are directly proportional to risk. TruCap is a prime example of how this can go wrong.

What Went Wrong?

TruCap Finance attracted investors with the promise of high returns—over 13%—through bonds backed by small business and gold loans.

But behind the glossy pitch, its financial foundation was weak.

As loan defaults rose, its credit rating was sharply downgraded, triggering early repayment clauses.

But TruCap didn’t have enough liquidity to pay investors back.

In desperation, it turned to the Marwadi Chandarana Group for a ₹100 crore bailout, expecting part of the funds by mid-June.

But delays in the fund infusion, along with slower-than-expected loan collections, left the company unable to meet its obligations.

On July 16, 2025, TruCap defaulted. A few days later, CARE Ratings downgraded its bonds—turning a high-yield promise into a painful lesson for retail investors.

Rating Downgrade and Default

On July 18, 2025, CARE Ratings (CareEdge) downgraded TruCap’s ratings, citing its inability to meet principal and interest payments on NCDs due on July 16, 2025.

CARE Report Excerpt (July 18, 2025): CLICK HERE FOR CARE REPORT
As of May 31, 2025, TruCap faced ₹103 crore in debt repayments over the next three months, while holding only ₹57 crore in unencumbered cash.
Expected inflows:

• ₹92 crores in collections
• ₹10 crores from existing promoters
• ₹100 crores from MCG (₹50 crore by June 15, 2025, balance by July)

Despite these expectations, timely liquidity was not ensured, leading to default.

Lessons from the TruCap Story

• A promised high return is often a signal to look deeper into the issuer’s financials.
• Credit downgrades can accelerate repayment obligations, catching both the issuer and investors off guard.
• Glossy platforms and simplified apps can make risky instruments seem safe to unsuspecting retail investors.
• Retail investors should be wary of NBFCs with weak financial profiles, even if they are offering higher returns.

What Makes Credit Risk So Tricky?

Credit events are like earthquakes. You never know when one will strike.

Everything looks fine—until one default starts a domino effect.

That’s why smart investors look beyond flashy returns and ask:

“Can this portfolio withstand a crisis?”

In that sense, products like these aren’t “alternative FDs.”

They’re more like FD lookalikes—wearing a suit, carrying a risk you can’t see.

Key-takeaways

Don’t chase high yield blindly

• High yields often come with high risk.
• Check the credit rating (AAA is safer than AA or A), but don’t rely on ratings alone — ratings can change.

Understand the bond terms

• Learn about coupon rate, maturity, call/put options, YTM (Yield to Maturity), and tax implications.
• YTM shown assumes holding to maturity — any early exit could lead to capital loss.

Know the risks

• Credit risk: Issuer may default.
• Interest rate risk: Bond prices fall when interest rates rise.
• Liquidity risk: May not be able to exit at fair value.
• Reinvestment risk: Coupons received may need to be reinvested at lower rates.

Prefer safer options for beginners

• G-Secs, RBI Floating Rate Bonds, SGBs, PSU bonds are more suitable initially.
• Avoid AT1 bonds or unrated instruments unless you fully understand them.

Diversify

• Don’t put a large chunk of your money into a single issuer or low-rated bond just because it gives 11–12% yield.

Compare with debt mutual funds

• If you don’t want to analyse each bond, debt mutual funds offer diversification, professional management, and better liquidity.
• But note: after April 2023, capital gains on debt funds are taxed at slab rate.

Don’t fall for glossy platforms

• Sleek UI/UX doesn’t reduce underlying credit risk.
• Read the fine print and cross-verify details, especially if the bond is unfamiliar.

Conclusion

Online bond platforms are good enablers, not risk mitigators. They democratize bond investing, but retail investors must:

• Educate themselves
• Start with low-risk instruments
• Be realistic about returns
• Know that safety lies in what you buy, not where you buy it from

Why a CFP Can Help You Invest Smarter

A Certified Financial Planner (CFP) can help you:

• Build a smarter debt allocation with credit risk mutual funds, not unregulated bonds
• Balance return potential with real-world liquidity and safety
• Match your portfolio with your actual life goals—not marketing promises

In short: Don’t risk your peace of mind for a few percentage points.